In the Autumn Statement, announced today, the Chancellor has abolished the slab system for stamp duty land tax (SDLT), as of midnight tonight.
Chancellor George Osborne said:
”Today I am announcing a complete reform of a tax that has been described as one of our worst-designed and most damaging of all taxes. Stamp duty is charged at a single slab rate on the whole purchase price of a home. It means big jumps in tax when house values tip into a new band. The distortions can be particularly damaging at the lower end. … And in recent years, the burden of stamp duty has increased on low and middle income families trying to buy a new home, as prices have risen. This makes it even more difficult to get together the cash deposits buyers need.
“… I am today abolishing the residential slab system altogether. In future, each rate will only apply to the part of the property price that falls within that band – like income tax.”
Under the new system, the following marginal rates apply:
- no tax on the first £125,000 paid;
- 2% on the portion from £125,000 up to £250,000;
- 5% on the portion from £250,000 up to £925,000;
- 10% on the portion from £925,000 up to £1.5m; and
- 12% on everything above that.
Osborne explained that the change would take the SDLT charge on a home of the average property price in the UK - £275,000 - down by £4,500. Only homes that cost just over £937,000 will see their stamp duty bill go up under this system – gradually to start with, rising to more substantial sums for the most expensive homes.